Do YOU understand Austrian Economics?

[icon124]

im still learning, but i can say it is very interesting...i love it and believe i will benefit so much from it

 

[stoutmaker]

O.k.

So here's a larger point about this topic. If only ~1/2 of us (currently 152 - 121) say we understood what Austrian economics is before the start of this discussion, (and I would put this groups intelligence at an above average level), what makes Ron think that he's gonna break through to the rest of America?

I'm not saying he shouldn't talk about it, I'm just suggesting that during a nationally televised debate when you have the chance for the greatest single voter penetration , you need to curb the message SLIGHTLY to keep it simple for folks and get them fired up about your candidacy. Once they are interested, THEN hit them with the heavy stuff, as if they're interested like we are, they're more inclined to WANT to learn more.

Someone (campaign manager, most likely) REALLY needed to help focus Ron for these debates and help him to still clearly state his messages, but in more user friendly to the format methods.

 

[inibo]

I understand it well enough to realize Mises was genius.

I actually learned the basis of it in a way that had nothing to do with economic. I spent a few years studying formal Chaos Theory and non-linear dynamic systems. I don't have the math background to call myself an expert, but I do have the computer skills to understand the algorithms that allow the exploration of fractals like the Mandelbrot Set and self-organizing systems, like John Conway's Game of Life.

It boils down to Spontaneous Order. When left to themselves, non-linear systems generate emergent properties that cannot be inferred from existing conditions--and cannot be forced to arise because they are hidden in the very fabric of existence. Emergent properties cannot be planned because the are built in. Whenever intervention takes place the implicit order collapses into drab uniformity and random noise. I grasped these concepts as interesting abstract ideas and ways to draw pretty pictures and create entertaining computer simulations.

What does any of that have to do with economics?

When I stumbled upon the Austrian School I realized that the thinkers like Mises and Friedrich Hayek were talking about the same thing. They were talking about how humans interact in free markets to create wealth and order. How it cannot be made to happen, only allowed to happen, and that those who wish to control human action can only increase poverty and destroy life.

Humanity will either realize this truth or decline into a global tyranny that culminates in barbarism and savagery. It is why Ron Paul's message is more important than Ron Paul.

 

[Trance Dance Master]

Actually I do have some indepth knowledge of Austrian Economics and the philosophy of free markets.

The strange thing I concluded upon intense research is the notion that free markets alone are the solution to a crux of issues; in fact in the absence of even a rudimentary form of regulation free market capitalism in its truest form is either a highly uncompetitive price control oligopoly (as seen in the agricultural markets in the 20's where the industry was as close to free markets as it could be) or its an extremely unstable economic activity which rewards those in fruitful times and devastates those when there is a downturn in productivity and profits.

Remember, in the absence of an external form of control, free market enterprise is championed by the notion of "self interest". It is within the scope of this philosophy that self interest alone can dictate a small amount of competitors to actually "fix" prices that will benefit the profitability of all enterprises involved, instead of the contrary direction where competitors compete on prices to the detriment of profitability. In this case, prices are sticky down which literally translates to price-push inflation as companies would rather cut workers then reduce prices, especially when they are fixed in the free market doctrine of economics.

Be weary of the romanticism of free-markets. It sounds really great but in reality it necessitates some form of external control to prohibit the oligopoly nature that free market enterprise seems to inevitably champion.

Labor unions develop so that the best workers stay employed and get paid what they deserve for being the best, or they all go elsewhere. Workers all have the right to organize for their benefit, or chose not to. The main reason labor unions have been declining in popularity these days is because the government got involved with them. My dad told me about when Reagan forced the airline workers to end their strike. I was two years old back then, but even when he told me about it over a decade later I could tell he was still angry about it.

http://eightiesclub.tripod.com/id296.htm

I'm so glad that the union I'm in, the Teamsters, have finally broke apart from the corrupt AFL-CIO.

http://www.msnbc.msn.com/id/8682415/

Hoffa is great. This is a new era for the working man.

http://www.teamster.org/05news/nr_050725_1.htm

 

[peacemonger]

Im getting my PhD in Economics so yes

I'm earning a PhD in Strategic Management. I just started my doctoral course in Econometrics. Ouch!!! This stuff is a little scary!

Oh yeah, the Austrian school of economics... I'm no expert, but I've been paying attention for a while. I think it makes a lot of sense.

 

[Mattsa]

I've never found anyone who could satisfactorily explain to me how a gold standard would work in today's world.

The amount of gold in the world is so small, it's difficult to understand how it could support the level of economic activity in the USA, let alone the global economy.

I think it's been calculated that 1oz of gold would have to be worth $300,000 to support all the trade in the global economy. That hardly seems like a realistic proposition so I'd like to hear more from RP exactly how he intends to do it.

 

[AceNZ]

Labor unions develop so that the best workers stay employed and get paid what they deserve for being the best, or they all go elsewhere.

Really? How does the union know that their members are the best? Do they test people? So if I could prove I was better at a given job than an existing union member, and if I joined the union, would they support me in getting a job, even if it meant that another union member would lose their job as a result because he wasn't as good as me?

I don't belong to a union, but from an outsider perspective, I always thought their goal was primarily to protect the incomes of the people who are already union members, and that asking people to give up their jobs (based on seniority) was an acceptable price to pay for that protection. I didn't think it has anything to do with "being the best".

If that's not right, please correct me.

 

[AceNZ]

The amount of gold in the world is so small, it's difficult to understand how it could support the level of economic activity in the USA, let alone the global economy.

The key thing to understand is that *any* amount of gold would be enough to support the global economy.

I think it's been calculated that 1oz of gold would have to be worth $300,000 to support all the trade in the global economy. That hardly seems like a realistic proposition so I'd like to hear more from RP exactly how he intends to do it.

OK, let's say your number is right. Why isn't that a "realistic" proposition? Just because it's a lot higher than price for gold than it is today? So what? The price is irrelevant when it comes to using gold as money.

The price of gold was $20/oz in the early part of the century, and is almost $900/oz today. That's a factor of 45. Going from $900/oz to $300,000 is another factor of 333. Given the amount of new money that's been created over the last 100 yrs, that doesn't seem unreasonable to me at all (the actual ratio doesn't matter -- it could be 1 million and a gold standard would still work).

I don't know if RP has said how he would do it, but others have sketched out plans. Using the US as an example, basically the idea would be to take the number of Federal Reserve Notes (FRNs) in existence in all forms (paper and electronic), and divide that by the number of ounces of gold in the US strategic reserves. Then issue new gold-backed money using that ratio.

EDIT: FWIW, current US gold reserves are about 8100 tons. The money supply as measured by M3 is about 11 trillion dollars. Dividing one by the other would make the price of gold about $46500/oz. -- only about a factor of 50 over where it is today.

 

[kodoandkang]

unions don't hire the best people, in fact, if anything they subsidize the poor workers. that is why in a free market they would inevitably break up. the same goes for cartels.

I think the best introductory book to Austrian economics is "Man, Economy and State" by Murray Rothbard.

 

[NMCB3]

Really? How does the union know that their members are the best? Do they test people? So if I could prove I was better at a given job than an existing union member, and if I joined the union, would they support me in getting a job, even if it meant that another union member would lose their job as a result because he wasn't as good as me?

I don't belong to a union, but from an outsider perspective, I always thought their goal was primarily to protect the incomes of the people who are already union members, and that asking people to give up their jobs (based on seniority) was an acceptable price to pay for that protection. I didn't think it has anything to do with "being the best".

If that's not right, please correct me.

I just recently had to join a union (new job) and can say that your view is correct. Being the best has absolutely nothing to do with it. Their is no incentive to be the best in a union because everyone is treated as if they produce the same amount of work even though they don't. All workers at pay grade two get the same wage regardless of their ability to produce. Raises are acquired only by contract and seniority, not by merit. Promotions are based on seniority, not by competence. If layoffs are necessary those with less seniority are the first to go, not the least competent and productive individuals. Production per worker (in my estimation) is half that of non union shops. Why produce when you are not rewarded for it? Instead you are rewarded for hanging around and sucking up a paycheck (seniority)

Personally I hate unions and am actively seeking new employment. I would much rather negotiate with my employer for wage and benefits one on one, than be forced into collective bargaining. Collective bargaining is socialistic, and predictably leads to less production and worker satisfaction.

 

[Trance Dance Master]

Really? How does the union know that their members are the best? Do they test people? So if I could prove I was better at a given job than an existing union member, and if I joined the union, would they support me in getting a job, even if it meant that another union member would lose their job as a result because he wasn't as good as me?

I don't belong to a union, but from an outsider perspective, I always thought their goal was primarily to protect the incomes of the people who are already union members, and that asking people to give up their jobs (based on seniority) was an acceptable price to pay for that protection. I didn't think it has anything to do with "being the best".

If that's not right, please correct me.

Workers who stick around are usually the best. If better workers do get hired, they can prove how good they are for the labor union as well as the business or businesses they work for based on how long they stick around to improve the company. If they're no good, they might wind up having some problems where they can't work anymore. Inferior workers create problems, sometimes those problems lead to their inability to work. Some businesses and unions don't have to ask the low seniority workers to quit. They make it unbearable for them to stay. If they can take the heat, they stick around and get better or take a job that better suits their abilities.

The labor market is a rapidly changing environment.

 

[AceNZ]

Workers who stick around are usually the best.

So "best" really means "most senior"? Why's that? It doesn't sound very free-market...

If I was going to have a doctor operate on me, for example, I would want the most skilled person available, and I would be willing to pay accordingly. I wouldn't want the most senior person, just because they've been around the longest, and then have to pay top-dollar to boot. It doesn't make sense in a free-market. Right?

 

[CelestialRender]

Somewhat. Wasn't very confident in clicking "yes", but I can argue it pretty effectively, so I guess I understand it as much as anyone who isn't a professional does.

 

[dkim68]

Unfortunately, I agree. This is where Dr. Paul is turning off a lot of potential supporters. He sounds like an Economics professor. It's not his fault he's as intelligent as he is. But the average person does not know what he's talking about. He needs to practice actually coming down a few levels to your average American's way of speaking. When he says "consumers" he should say "people". When he says "Non-interventionist Foreign Policy" he should say "Let's mind our own business." When he says "Monetary Policy" he should say "The way we handle money." When he refers to himself as a "Strict Fiscal Conservative" he should say "I don't like to waste money." Etc, etc.

Unfortunately, voters sometimes think in terms like "Is this a guy I could sit down and have a beer with?" and choose their candidate based on that.

 

[swefred]

Grate Free literature on liberty and economics:

Video: Money, Banking and the Federal Reserve

Audio: What Has Government Done to Our Money? - Murray N. Rothbard

Audio: The Economics of Inflation - George Reisman

Audio: The Law pt1 pt.2 - Fredric Bastiat

pdf: HUMAN ACTION - Ludwig von Mises

Text: Economics in One Lesson - Henry Hazlitt Audio: pt 1 pt 2

Text (short): The state - Frédéric Bastiat




Maby we shuld start a thred devoted to links to literature on economy and liberty.

PS. If avaible plase post literature as audio, atleast I prefere to listen to books.

 

[Trance Dance Master]

So "best" really means "most senior"? Why's that? It doesn't sound very free-market...

If I was going to have a doctor operate on me, for example, I would want the most skilled person available, and I would be willing to pay accordingly. I wouldn't want the most senior person, just because they've been around the longest, and then have to pay top-dollar to boot. It doesn't make sense in a free-market. Right?

It would still be free market. People could still choose whether or not the join a union or hire union workers. However, the union would make it make sense to those who don't get it. If they don't pay the top dollar, they'll get bad work done that will have problems later. It can be arranged for that to be the case for those who don't like unions.

As far as the doctor operating on you, the most important skill the doctor needs to have is the ability to sell you on the idea that you actually need an operation. 90% of a doctor's work is salesmanship.

 

[Pingwin]

Here's an article by Lew Rockwell that is a good overview:
"Why Austrian Economics Matters" 10 pages - not too long.

http://www.heritage.org/Research/Economy/upload/92230_1.pdf

 

[Trance Dance Master]

I've never found anyone who could satisfactorily explain to me how a gold standard would work in today's world.

The amount of gold in the world is so small, it's difficult to understand how it could support the level of economic activity in the USA, let alone the global economy.

I think it's been calculated that 1oz of gold would have to be worth $300,000 to support all the trade in the global economy. That hardly seems like a realistic proposition so I'd like to hear more from RP exactly how he intends to do it.

About return to gold as money:

http://www.financialsense.com/editorials/hultberg/2005/0227.html

About paper money boom and bust cycles:

http://www.benbest.com/polecon/buscycle.html

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin

 

[freedominnumbers]

I find Austrian theory much easier to wrap my head around than Keynesian. I believe this is because Austrian theory is based directly on Libertarian principles. This means that if I've never heard a particular issue on the Austrian side or don't understand it I can simply ask "Would that practice violate the Life, Liberty or Property of another?".

 

[Ron Galt]

As a SC native, I'll assure you that most people in SC don't understand "Austrian" economics.

In fact, most SC voters have probably never heard of Austria and probably thought he said "Australian" economics.